NJ Revenue Will Be Impacted By NY Online Sports Betting

New Jersey sports betting numbers have overperformed the state’s population from the outset. But without New Yorkers padding its stats, New Jersey could go from the national leader in betting handle to battling to stay in the Top 5 in short order.

New York is hopeful it can launch its mobile sports betting industry before the start of the NFL playoffs (or maybe the Super Bowl is a more realistic target), and when it does, it expects a flood of new sports bettors to start placing bets. But the Empire State will also experience a glut of customers “coming home,” so to speak. Who are these nomadic bettors? New Yorkers who are currently placing their sports wagers in New Jersey.  

New Jersey sportsbooks have benefitted mightily from the Garden State’s shared border with New York. Sitting on that border is New York City, which boasts a population that rivals the entire state of New Jersey. And because New York dragged its feet legalizing sports betting (something New Jersey lawmakers and regulators were happy to see), New Yorkers have made the short trek across the Hudson River to place bets since 2018.

That’s all about to change. When New York sports betting sites launch, New Jersey’s sports betting numbers are going to take a massive hit.

New York Giveth and Taketh Away

New York legalized mobile sports betting in April 2021, but the state’s dreams of launching by the end of 2021 never materialized. The new target is the start of the NFL playoffs, which means a launch could occur in the coming days or weeks.

New York is expected to dethrone New Jersey upon its entry, with Nevada, Illinois, and Pennsylvania poised to challenge and potentially leapfrog a weakened Garden State.

In October, the sports betting handle in these states was as follows:

• New Jersey = $1.3 billion
• Nevada = $1.1 billion
• Illinois = $840 million
• Pennsylvania = $776 million

Estimates and anecdotal evidence have New Yorkers accounting for as much as 25% of New Jersey’s nation-leading sports betting numbers. Eilers & Krejcik Gaming, in conjunction with GeoComply, estimated New Yorkers accounted for $837 million of the $4.6 billion in wagers placed in New Jersey in 2019. That works out to almost 20% of New Jersey’s sports betting handle.

As devastating as it would be to lose 1/5 of its total handle, New Jersey could suffer an even greater loss.

It’s estimated 400,000 New Jersey residents work in the Big Apple, and these commuters could conceivably place wagers on the New York side of the Hudson during their commute, lunch, or while at work.

Will New York’s Burdens Work in New Jersey’s Favor?

Some have argued that the steep operator burdens placed on New York mobile sports betting providers will work in New Jersey’s favor. The argument is some customers will continue to cross over into New Jersey to place their bets because they might receive slightly better odds or value.

If that were true, why are bettors traveling at all? Why wouldn’t they use offshore books? The reason is simple and has to do with bettor priorities.

Based on the evidence thus far, most legal US bettors prioritize convenience. But there’s a large subset of US bettors (evidenced by how many are willing to travel across state lines to place bets inconveniently) that rank convenience behind legality. For these bettors, odds and value only come into play after they’ve determined it’s legal and relatively convenient.

As such, unless New Jersey sportsbooks get creative, only a trivial number of bettors will continue making the trek to the Garden State. Even if it’s only a 20–30-minute trip, it’s a 20-30 excursion they no longer must make.  

There is one caveat to this analysis: operator redundancy. Pretty much every anticipated New York operator is also active in New Jersey. With a 35-point spread in tax rates, operators have a lot of incentive to get bettors to wager on the New Jersey side of the Hudson River, particularly big bettors.